Representative Kott has asked for additional
guidance regarding the "possible disposition"
of his surplus campaign funds before the new Campaign
Disclosure Law takes effect on January 1, 1997. In particular,
he has identified three options available under existing
law: (1) use in a future campaign; (2) transfer to an office
expense account; and (3) taking the surplus as income. Related
to each of those options, he has asked a series of specific
questions. Those questions are addressed below.

Senator Lincoln has asked specifically whether
funds from a legislator's campaign account which are transferred
to a "legislative office allowance account" may
be transferred from the office allowance account to a legislator's
personal account or campaign account once the new Campaign
Disclosure Law takes effect. Her question is addressed in
paragraph #2 regarding transfer to an "office expense"
account.

1. Use in a Future Campaign

Representative Kott asks the following:
"[I]f I elect to use the surplus in a future election,
as permitted by the grandfather clause, what procedural
steps must I take prior to January 1, 1997? Do I need to
notify you of my election? Should a new, designated account,
be established? Are there any steps or actions that I should
take to exercise my rights under the grandfather clause?"

a. Public Disclosure: The Commission has
distributed bright green Certification Forms, asking former
candidates to certify that they intend to use their campaign
funds in a future election. To clarify your plans, please
return that form to our office on or before December 31,
1996.

The statute does not require that you
take any procedural steps to preserve your right to use
surplus campaign funds in a future election. The Commission
will assume that any money left in a campaign account
after January 1, 1997 is held by an individual who intends
to use the money for a future election. If that is not
the case, the law requires that all money still held in
a campaign account after January 1, 1997 be disbursed
under the requirements of AS 15.13.116.

b. Creation of a New, Designated Account:
To eliminate potential confusion over the reservation
of surplus campaign funds for a "future election"
under section 32, the Commission recommends that former
candidates with surplus campaign funds segregate those
campaign funds in a distinct account.

According to the November 4, 1996 opinion
of the Attorney General, after January 1, 1997, surplus
campaign funds are subject to the limitations of the new
law. As such, they may only be spent for campaign related
expenses. As a result, it is imperative that the campaign
funds not be commingled with other moneys. Further, under
section 32, a candidate is free to use the money in one future election. You are free to choose which election
that will be. Spending one dollar of the surplus money
on a campaign expense for an election, however, will indicate
that you have chosen to use your pre-1997 surplus funds
on that election. Thus, to reduce the risk of an inadvertent
selection and to ensure that you are free to use the surplus
money in the "future election" you intend, the
Commission recommends that you keep your campaign contributions
in a separate and distinct account.

2. Transfer to an "Office
Expense" Account

Representative Kott asks the Commission
to address the following: "[P]rior to the new law's
effective date, can I transfer all or a portion of the surplus
to my office expense account? If so, what conditions must
be satisfied? Are there any restrictions as to the amount
that may be so transferred? If transferred to an office
expense account, for what purposes may the funds be expended?
Should I notify the APOC of the transfer, and if so, when
and how should notice be given? And, will the new law's
accounting requirements apply to the funds transferred?
What additional steps or actions need to be taken to legally
transfer funds to my office expense account?"

Senator Lincoln inquires whether funds from
a legislator's campaign account which are transferred to
a "legislative office allowance account" may be
"transferred from the office allowance account to a
legislator's personal account or campaign account"
once the new Campaign Disclosure Law takes effect.

a. "Office Expense" Accounts:
The Commission is aware of only two kinds of office accounts
under state law. The first type of office account contains
the annual allowance permitted legislators for "postage,
stationery, stenographic services, and other expenses."
AS 24.10.110. The account is overseen by the legislative
fiscal officer and is limited to the amount of the annual
allowance. Based on discussions with a representative
from the Legislative Affairs Office, the Commission understands
that candidates are not permitted to deposit surplus campaign
funds in this account.

The second type of office account authorized
by state law is the account established in AS 15.13.116(b)(9)
of the new Campaign Disclosure Law regarding the disbursement
of surplus funds following an election. Under the new
law, following an election, a state candidate may transfer
unused campaign contributions to a "legislative office
account." There are specific limitations and restrictions
on the new account. First, the transfer is limited to
"$5,000 multiplied by the number of years in the
term to which the candidate is elected." Second,
the money in the account "may used only for expenses
associated with the candidate's serving as a member of
the legislature." Finally, legislators are required
to annually report "all amounts expended from the
legislative office account" on the Yearend Report.

Because you are unable to transfer money
into either the Legislative Affairs annual allowance account
or the APOC regulated legislative office account created
under the new law, the Commission assumes that your question
refers to a third type of office account. The Commission
views such account no differently than it would a personal
account. Under existing campaign disclosure law, you
are free to transfer all or a portion of your surplus
to the account you describe before January 1, 1997.

b. Public Disclosure: Should you transfer
all or a portion of your surplus campaign funds to the
account you describe, you are required to report the transfer
as if you had taken the money as personal income. You
would report the amount transferred under "Candidate's
Own Money" on schedule C of your Yearend report.
In addition, you would report your campaign account as
a source of income on your Legislative Financial Disclosure
report.

As long as funds in the account you describe
are not commingled with funds in an APOC regulated legislative
office account, AS 15.13 does not prohibit you from transferring
your funds to a personal account or a campaign account.
Transfers to your campaign account, however, are subject
to the new time limitations on the acceptance of contributions;
further, you must disclose the transfer on schedule C.

c. Further Caveats: Because the kind of
account you describe is distinct from the legislative
office account created by the new law, AS 15.13.116(a)(9)(C)
does not require that you annually account for all amounts
expended from that account. You should be aware, however,
that following disbursement under AS 15.13.116 you may
trigger the accounting requirement for all the money in
the account if you commingle money transferred under the
disbursement provision with money in an existing office
account.

Recognizing the complexity of these distinctions,
legislators interesting in transferring their surplus
campaign funds to an "office expense" account
might wish to consult with other relevant authorities
in addition to the Commission; in particular, the Legislative
Affairs Office and the Internal Revenue Service for tax
implications.

3. Taking the Surplus as Personal
Income

Representative Kott asks the following:
"[D]o I still have the option, prior to January 1st,
to take all or some of the funds as personal income? If
so, how is this accomplished? What type of notice is required
to take this action?"

a. Taking Unused Campaign Contributions
as Personal Income: Prior to January 1, 1997, you are
not prohibited from taking some or all of your surplus
campaign contributions as personal income.

b. Procedural Steps for Taking Contributions
as Income: If you choose to take your unused campaign
contributions as personal income, you must move the money
out of your campaign account before January 1, 1997. One
way to demonstrate that you had taken the unused campaign
contributions as personal income prior to January 1, 1997
would be to deposit a check from your campaign account
to your personal account.

c. Public Disclosure: As described above, you are required
to report your transfer on schedule C of the Yearend Report.
In addition, you must report your campaign account as
a source of income on your Legislative Financial Disclosure
Report.

4. Combination of Options

Finally, Representative Kott inquires whether
he may "exercise more than one option (for example,
rolling part of the surplus over to be used in my next campaign
and depositing part into my office account)."

Under existing campaign disclosure law,
you are free to adopt any combination of the options you
have described above.

The Commission approved this advisory opinion on December
5, 1996. The advice in this opinion applies only to the
specific activity for which the advice was requested.

A copy of the original letter requesting
the above advisory opinion is available upon request at
the Alaska Public Offices Commission. (907) 276-4176.